BGC Chart Chatter SP 500 Futures First Look….Oct 31, 2011

SP 500 futures in stair step down pattern as uncertainty regarding the details of the EU blue print leads to profit taking. Also, radio silence from China regarding their role in the EU bailout leads to a measure of stop loss selling disappointment. China will firmly maintain its property curbs and fine tune other economic policies at an appropriate time, according to a statement following a State Council meeting chaired by Premier Wen. Today is the last trading day of month, begins stocks best 6-months cycle. The markets are still in head line mode. The problem now is that it will take very good news to maintain psychology while inline news or anything worse than expected should lead to profit taking. Cycle wise the shift is early month weakness begets late month strength in the best 6 month cycle. We're watching the price action from Nov/ Dec 2010 as the models. The MF GLOBAL unwind effect on the futures markets could create the mechanical unsettling which keeps bulls sidelined.

Copper -3.2% in early am takes edge off commodities/miners/basic materials.

Gold finds resistance at 1755 (D) / 1754 (W) in several time models leaves short term daily charts in consolidation above 1701-1685.

SP 500 futures closing focus range: inside range 1277 / 1264….outside range 1291 / 1257 remains in play from Friday

Italian 10-yr yields becomes the next canary in the coal mine with yields last 6.14% off Thursday's low of 5.705%; August high at 6.39%

USDJPY currency intervention runs weekly charts off our next ledge of support at 75.30, blowing through stops at 76.70, 77.80 making a reach to the top of our weekly chart model's range at 79.30-79.70. This area represented the failure line in July

EURJPY conversely, the next ledge of grouped resistance is 112.30

Early chart views:

EURUSD (1.44005 last) turns off our old pivot line we had used from March through August at 1.4230. Shifts daily chart into consolidation. First danger of losing momentum below 1.4080-1.4040. Short term continuations are 1.3970 and 1.3880 for acceleration.   Weekly charts have resistance next at the Nov 2010 high at 1.4282. Weekly support begins at 1.4080, with the first concentration at 1.3980-1.3950.

EURUSD 5 min chart  first momentum loss line at 1.4125 triggered at 11:30pm

SP 500 Futures (1274.30 last) lower highs, first lower low forming. Sub 1272.00 for very short term momentum loss. Next grouping for continuation at 1257-1255

SP 500 Futures Daily Chart

Next resistance ledges (multiple levels): 1272-1277 ..1284….1288.70…..1291 (7/18 low)…..1297

Multiple supports: …1264…..1257-1255……1244….1229……1220…..1215-1213 (holding yesterday's low test)

SP 500 Futures Weekly Chart:

multiple resistances: …..1279….……1287-1291

Multiple supports: 1262-1261…..1249…..1227-1220…..1203

SP 500 Futures Monthly Chart:

Multiple resistances: 1265…1274-1279 major…..1289……1303

Multiple supports: 1246……1235…..1218…1205-1194 major

Economics Calendar – Daily View

·         Monday, October 31^st : US (Chicago PMI, Dallas Fed Survey)

·         Tuesday, November 1^st: US (ISM Manufacturing, Construction Spending); EuroZone (Euro Manufacturing PMI, UK Manufacturing PMI, UK GDP, Swiss Retail Sales/PMI);Other (China PMI)

·         Wednesday, November 2^nd : US (ADP Employment, FOMC Rate Decision); EuroZone (GermanyUnemployment Rate, UK Construction PMI)

·         Thursday, November 3^rd : US (Initial Jobless Claims, ISM Non-Manufacturing, Factory Orders);EuroZone (ECB Rate decision);Other (China Non-manufacturing PMI)

·         Friday, November 4^th: US (Nonfarm Payrolls, Unemployment Rate); EuroZone (Euro PPI, GermanyFactory Orders)

Corporate Events Calendar

·         Mon Oct 31: earnings before the open (Barclays, HUM, L, MCY, SOHU, WRI); earnings after the close (ALL, APC, BGC, CAVM, CCO, FST, IDTI, LEAP, MPG, PPS, PRE)

·         Tues Nov 1: earnings before the open (ABC, ADM, AMT, BHI, BPI, CHTR, CME, COCO, CVLT, HCA, EMR, EXPD, FIS, IT, MPC, MRO, Nomura, NXPI, PCS, PFE, RDN, Sandvik, SIRI, VSH);earnings after the close (AMCC, ATML, AXS, CF, DISCA, HAIN, HTCH, JDSU, MWA, NLC, PBI, PRI, RNR, UNM, VSH, XL); sales (auto companies release sales)

·         Wed Nov 2: earnings before the open (AOL, BDX, CLX, CMCSA, CTSH, EIX, GRMN, H, HNT, HUN, ICE, LVLT, MA, MHP, MMC, OZM, TDW, TWX); earnings after the close (CLWR, CTL, FBHS, HIG, KFT, KIM, MUR, NWS'a, PL, PRU, QCOM, RLD, TSO, WFM, WFR, Z, ZIP); analyst meetings (CAH)

·         Thurs Nov 3: earnings before the open (Adidas, ANR, BNP Paribas earnings, BR, BT, Cable & Wireless, CBB, CI, CVS, DIN, DTV, EL, FIG, IACI, ITG, K, LXP, Man Group, MFC, MGM, MT, NYX, SNY, STRA, Swiss Re, TDC, TEL, Unilever); earnings after the close (AIG, CBS, FSLR, GNW, N, POWI, PRO, QSFT, SBUX, SWKS); sales (retailers report monthly sales)

·         Fri Nov 4: earnings before the open (G, Hermes, KKR, THS, MSG, RBS, WPO); analyst meeting(EFII)

Corporate Events Calendar – Week of Mon Nov 7

·         Mon Nov 7: earnings before the open (DISH, L'Oreal, JCDecaux, SYY); earnings after the close(CFN, PLCM, RAX); analyst meetings (ALTR)

·         Tues Nov 8: earnings before the open (Cap Gemini, Intesa Sanpaolo, Lloyds Banking Group, SMG, SocGen, VOD); earnings after the close (ATVI, RBCN, ROVI); sales (MCD); analyst meetings (SWI)

·         Wed Nov 9: earnings before the open (ASH, CSC, DF, GGP, HSBC, M, RL, WEN); earnings after the close (CSCO); analyst meetings (ADBE, CY, ERIC, HAS, LOGI)

·         Thurs Nov 10: earnings before the open (Deutsche Telecom, Siemens, VIA); earnings after the close(DIS, MCP); analyst meetings (AVID, MCD, MON, MRK)

·         Fri Nov 11: earnings before the open (Allianz, DHI, Rolls Royce); sales (GWW)

Events for the week of Mon Oct 31 – the focus stays on the “macro” w/a slew of CBs (RBA, ECB, FOMC), major Oct eco data (PMIs/ISMs, jobs), and the G20 leaders summit.  Retailers and auto companies report their Oct sales also.  On the earnings front, we are in the final stages of the Q3 reporting period w/the focus this week on US insurance (PRU, AIG, HIG, LNC), media (TWX, CMCSA), and Eurozone banks (Barclays, RBS, BNP).

Catalysts/thoughts for next week and the rest of 2011

·         Oct eco data needs to continue the recent trend of beating expectations (PMIs/ISMs on Tues 11/1 and US jobs on Fri 11/4) – the last couple weeks of eco data has surprised on the upside and investor sentiment no longer views a recession as being inevitable (which was getting to be the case back in Sept and Oct).

·         Fed – how will Bernanke address recent chatter around a potential MBS QE3? - the FOMC is holding a two day meeting 11/1-11/2 w/a decision and Bernanke press conf scheduled for Wed 11/2 (note that this Fed decision will hit at 12:30pmET Wed afternoon).  This will be the last FOMC/Bernanke press conf for 2011 ·         ECB - meeting on Thurs 11/3 (press conf 7:45amET and press conf 8:30amET) - will they wind up cutting rates?  It seems like the market is 50/50 at this  Perhaps more important than a rate decision will be Draghi's remarks re the SMP - will he pledge to keep it open and continue buying sov debt?  Draghi intimated he would make such a commitment during recent remarks (Wed 10/26) although formally doing so during the ECB press conf would be helpful.

·         G20 Leaders Summit - 11/3-4 (the final communique will prob. wind up hitting late on Fri after the NY close although the wires will likely have updates during trading).  This isn't a huge event and the markets aren't looking for anything too specific. .

·         Europe details - the 10/26 left a lot of questions for investors that officials have promised to answer during Nov.  Among them: 1) what will the participation rate of the 50% Greek PSI haircuts be?  This has to be “voluntary” so as to not trigger CDS payments; 2) what are the specifics of the EFSF leveraging techniques?  When will the first-loss insurer option first be made available?  When will the SPV be up and running?  We may get the answer to some of these questions at the 11/7-8 Eurozone Finance Ministers Meeting.

·         Italy - the next few months could wind up being pretty important for Italy.  Berlusconi's government has promised to deliver specifics on the latest reform/austerity plans by Nov 15. .

·         Spain - note that the country holds elections on Nov 20 after which a new PM will take office.

·         European short bans – will Europe decide to lift its short sale bans now that its debt problems are ostensibly fixed?

·         China monetary policy – the market increasingly is of the view that China has placed its tightening campaign on hold and many think it could start easing (bank RRRs could be tweaked lower during 2011 while policy rates may be reduced sometime in Q1:2012).

·         US government – will the Supercommittee wind up being successful?  The committee faces a deadline of Nov 23 by which they need to strike a deal on deficit reduction or else ~$1.2T of automatic cuts kick in.  If no deal is reached by 11/23, we could wind up seeing more ratings agencies downgrade the US.  Keep in mind that beyond this Supercommittee, the US gov't's present spending resolution lasts through Nov 18 after which Congress will have to pass another bill (are we heading for another shutdown battle just like '10?).

·         US debt Supercommittee and its Nov 23 deadline – could a failure to secure a deficit deal have implications for France's AAA?   ·         US Mortgages - the FHFA has said it will publish specifics on the recent HARP expansion by Nov 15.

Major macro events to watch  

·         Mon Oct 31 - Trichet retires on Oct. 31

·         Mon Oct 31 – France is expected to unveil further austerity measures during the week of 10/31.  Franceis expected to tweak its VAT (DJ)

·         Mon Oct 31 – China PMI hits after the close.

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·         Tues Nov 1 – Draghi takes over at the ECB

·         Tues Nov 1 – US manufacturing PMI gets reported.

·         Tues Nov 1 – auto sales globally get reported for Oct.

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·         Wed Nov 2.  FOMC decision.  Berananke will be holding a press conf after this event.

·         Wed Nov 2 – US jobs numbers – Challenger's job cuts update and the ADP employment report.

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·         Thurs Nov 3 – ECB meeting.  This will be Draghi's first meeting as ECB president.  7:45amET decision and 8:30amET press conf.

·         Thurs Nov 3 – hearing in the BAC $8.5B repurchase case

·         Thurs Nov 3-Fri Nov 4: G20 Annual Summit in Cannes, France

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·         Mon Nov 7 – Eurogroup fin min meetings.

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·         Tues Nov 8 – meeting of European finance ministers

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·         Thurs Nov 10 - Asia-Pacific Economic Cooperation (APEC) Finance Ministers Meeting November 10

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·         Sat Nov 12 - APEC Leaders Meeting November 12-13, 2011

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·         Sun Nov 13 - APEC Leaders Meeting November 12-13, 2011

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·         Tues Nov 15 – FHFA expected to deliver further guidance to banks re HARP expansion.

·         Tues Nov 15 – Italy will present new growth plan by Nov 15.

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·         Wed Nov 16 – BAC court case re its $8.5B mortgage repurchase settlement.

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·         Thurs Nov 17 – UBS analyst meeting

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·         Fri Nov 18 – current US spending resolution ends Nov 18.

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·         Sun Nov 20 – Spanish elections

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·         Wed Nov 23 - deadline for Joint Committee recommendations

·         Wed  Nov 23 – bankruptcy hearing in Harrisburg case.

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·         Tues Nov 29 – meeting of Eurogroup finance ministers

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·         Wed Nov 30 – meeting of European finance ministers

Barron's

·         Barron's money manager poll – surprising levels of bullishness; ~52% of respondents were upbeat, down from only 59% (and the survey was mailed out in late Sept, when stocks were hitting lows).  Managers aren't looking for huge returns (up ~5% by June of '12) and most focus on the tape's present low valuation.  Most think Romney will be the GOP candidate and go on to beat Obama.  Managers favored US equities and large cap tech in particular (MSFT, AAPL, INTC, HPQ, QCOM, and AMZN).  Also pos. remarks on CLD, ACI, NVR, and TOL.  Most people are cautious on financials and think they will underperform next year.  Utilities and staples were called overvalued.  Among the stocks people think are overvalued were NFLX, CRM, AMZN, AAPL, and CMG.  Barron's  http://on.barrons.com/uku4hV

·         GT – pos. comments; the stock is cheap and could hit the low $20s; mgmt is taking action to improve the balance sheet and the funded status of the pension.  Barron's    http://on.barrons.com/tsEb5I

·         AMZN – positive comments; the stock could have 20% upside from present levels.  All the fulfillment center investing will drive earnings and revenue growth in '12.  Barron's  http://on.barrons.com/vYOvjp

·         WFM – neg. comments; the stock is very expensive and sentiment is very bullish.  Barron's  http://on.barrons.com/uogeQw

·         MRVL – positive comments; the co is very cheap and earnings are forecast to grow 15% next year.   The co has some exposure to the HDD industry, which should achieve sig. pricing power next year.  Barron's   http://on.barrons.com/uogeQw

·         AGN – the stock is expensive and has had a nice run but will prob. prove resilient – Barron's  http://on.barrons.com/uogeQw

·         Hong Kong banks – cautious remarks.  They have been ramping up their lending to China just when that economy could be heading towards a downturn.  Chinese firms have rushed to borrow in HK to take advantage of low interest rates (HK pegs its currency to the US$ and thus imports the monetary policy of the US) – Barron's  http://on.barrons.com/u6uR5o

·         NFLX – neg. comments; Barron's warns that valuation remains high and NFLX will suffer from rising content costs and shrinking margins for some time to come.  Barron's   http://on.barrons.com/to7CoM

·         MMM – positive comments; mgmt may have cut its earnings outlook but the co still has a strong growth outlook, reasonable valuation, and pays a decent dividend.  Barron's    http://on.barrons.com/to7CoM

·         NLC, ECL – Barron's makes pos. comments on NLC and the combined ECL/NLC.  Barron's http://on.barrons.com/to7CoM

______________________________________________________________

Roger Volz

Director

BGC FINANCIAL L.P.

Cash Equities

646-346-7412

1-866-323-1585

The information contained herein is for informational purposes only and is not to be construed as an offer or solicitation for the sale of securities. While the accuracy or completeness of the information contained can not be guaranteed by the author or BGC Financial L.P., it is believed to be accurate and reliable at the time of publication and care was taken in its preparation. The opinions expressed are those of the author and not necessarily those of BGC Financial L.P., and/or officers, directors, employees or its affiliates. This information is not intended to be a research report nor an analysis of any company. It should not be relied upon for making investment decisions.  BGC Financial L.P. is a member of the Financial Industry Regulatory Authority (FINRA).